Following the release today of Getech's 2020 financial and operating results, Chris Jepps, Chief Operating Officer, provides the following review:

"Getech's core value proposition combines our Geoscience and Geospatial expertise to provide unique insight for our energy sector customers.

In an energy market that is transitioning to deliver a decarbonised and decentralised primary energy system, the application of Getech's combination of skills and technologies opens a wide front of commercial opportunity to the Group. In 2020 we embraced these changes by continuing to evolve our solutions for our core petroleum markets, whilst also accelerating our plans to diversify into other energy and natural resource markets - including Mining, Geothermal and Hydrogen.

One of the foundations of our Petroleum offerings is our market leading Gravity and Magnetic (G&M) expertise. Through 2020, sales of data and related services declined as our customers reduced their levels of project-based work. Getech responded to this by focusing our staff's time on enhancing and broadening our offering. In 2020, we completed and released 'Multi-Sat 2020' - a major new gravity data product that integrates information from the latest satellites with innovative processing methods to create the most accurate, reliable and coherent gravity data for all offshore areas, providing resolution comparable to regional 2D shipborne solutions.

We also further enhanced our flagship earth modelling product, Globe, with the release of 'Globe 2020', which delivered new information, analytic tools and additional usability features, including an initial version for ArcGIS Pro, Esri's latest desktop GIS application. Our work to re-position Globe for the evolving petroleum market were further rewarded in 2020 when we secured a new super-major customer and high renewal rates for existing subscribers and those on multi-year licence agreements.

Elsewhere in petroleum, our GIS Software team completed releases that delivered significant enhancements to our software's data integration, exploration prospectivity analysis and onshore shale gas/oil well pad & lateral planning capabilities. As with Globe, software renewal rates through 2020 remained high and we were able to add several new customers through the year.

In addition, we continued to successfully deliver on a wide variety of oil and gas GIS services contracts, including the completion of our first significant GIS implementation project in the pipeline sector. That these products and services projects were delivered to customers on time and within budget was a notable achievement given the migration to home working caused by Covid-19 from March 2020.

Alongside our work in petroleum, through 2020 we focussed on better understanding how our core products were being used in the Mining sector. As a result of this, we were able to leverage both our G&M expertise and Globe to help customers deliver Copper and Lithium exploration projects - both essential strategic minerals for the Energy Transition.  As a result of these project successes, we commenced planning additional workstreams for further expansion into the Mining market, and work is now well underway in 2021.

Our innovation and market diversification work also identified Geothermal as a potentially untapped market for Getech. Through a combination of our G&M, geoscience and GIS expertise we developed the concept of the 'Heat Seeker' solution - a tool for locating potential geothermal resource sites within reach of readily available customer markets for heat or power. As we planned the work likely to be necessary for developing a Heat Seeker prototype, we also built a network of contacts within the Geothermal market and established strategic relationships to assist our work - one result of which was Getech becoming a member of the International Geothermal Association (IGA) in March 2021, an organisation that we continue to work in partnership with through 2021.  

In 2020 we drove further diversification by entering the Hydrogen sector through our relationship with H2 Green, securing an exclusive option to acquire the business in November 2020. Early in our discussions with H2 Green we recognised that a key component of our joint value proposition was Getech's expertise in GIS and geospatial location analytics. These skills were key to enabling H2 Green to identify and rank multiple site locations across the UK as it developed and optimised its portfolio of green hydrogen opportunities. The success of this approach led to the acquisition of H2 Green in 2021 and the delivery of additional phases of location analysis in support of identifying further green hydrogen site locations.

Finally, our group-wide Innovation team, established in 2019, continued through 2020 with its remit to research and develop cross-discipline opportunities for new markets, capabilities, partnerships, products, and services. In 2020 our innovation work focussed on assessing opportunities within the geothermal and mining domains; applying machine learning to our Globe and G&M products to create new insight; further investigating the concepts of IoT and Digital Twins to feed geospatial projects; and developing solutions to enable organisations to analyse their CO2 emission sources and assess alternative greener energy supply as part of their energy transition requirements."

2020 Highlights

Covid-19 and customer activity update

• In 2020 Getech balanced risk management with business development in zero-carbon energy.
• Covid-19 has created a challenging business environment, 2020 customer budgets reduced by c35%.
• Getech's orderbook, annualised recurring revenue and customer relationships remained robust, but revenue declined as customers cut back project work, which also impacted data sales.
• The move to home working was smooth; projects continue to be delivered on time and to cost.
• Actions implemented from 1 May 2020 reduced monthly Group costs by c26%.
• Getech retains further cost flexibility and has maintained the capacity to deliver its orderbook and the resources needed to maximise the impact of its sales conversations and new business activities.

2020 financial highlights

• Revenue £3.6 million (2019: £6.1 million)
• Gross margin 53%, protected by cost management initiatives (2019: 58%, adjusted)
• Orderbook remained strong £2.7 million at 31 December 2020 (31 December 2019: £3.1 million)
• Annualised Recurring Revenue £2.1 million at 31 December 2020 (31 December 2019: £2.3 million)
• Total cost base 20% below 2019 (2020: £5.1 million; 2019: £6.4 million)
• Adjusted EBITDA £0.5 million loss (2019: £0.9 million profit)
• Net cash at 31 December 2020 £1.4 million (31 December 2019: £2.7 million)

Beyond 2020 - delivering diversified growth

• Getech is using its earth science and geospatial expertise to accelerate progress to global net-zero, by supporting its customers in the optimisation of existing, and delivery of new, energy assets and strategic mineral resources.
• For existing customers this means helping identify the highest value/lowest carbon-impact petroleum assets, whilst also utilising Getech's skills and technologies to support their net-zero asset investment.
• This work connects Getech with a wider group of net zero customers, with whom the Company is beginning to build a more diversified baseline of product and service sales.
• Getech's commitment to this path is underlined by the Company joining the United Nations' Race to Zero campaign - Getech's pledge is to be carbon-neutral by 2030.
• Getech will deliver this through the application of its products and skills, and by direct decarbonisation steps - taking targeted equity exposures in emergent carbon neutral value chains.
• In April 2021 Getech raised £6.25 million through a Placing, Subscription and Open Offer of shares.
• This will be used to grow and diversify Getech's activities across the zero-carbon economy, with particular focus on the green hydrogen, carbon capture, geothermal and strategic minerals sectors.
• Focus is on activities that are essential, repeatable and strongly scalable.
• Getech will measure success through our carbon-neutral goal, their profit and the creation of asset value.
• In March 2021 Getech completed its first project investment - acquiring H2 Green, a data-led business that is using Getech's location analytics to establish a national network of green hydrogen hubs.
• Getech is also aligning its Board to these areas of focus - appointing a new Chairman and  new NEDs. This brings expertise in clean technologies, zero-carbon investment, ESG and business scale up.
• Getech's Board is excited by the opportunities ahead and values the continued support of the Company's shareholders, customers and business partners.

KeyFacts Energy Industry Directory: GETECH